Citigroup Inc. (C) was the target of a skeptically skewed option strategy on Tuesday, with one investor looking to hedge against possible near-term weakness in the shares. By initiating a collar spread on the banking issue, the options trader has effectively locked in a pair of acceptable exit prices on his C investment.

Specifically, the speculator sold to open nearly 26,000 June 4 calls, and simultaneously bought to open an equivalent number of June 3 puts. C was trading just shy of $4 at the time the spread was initiated.

The following article was contributed via Seed.com, AOL's new platform for freelance writers.

Warren Buffett is one of the few investors in the world that has consistently succeeded where others failed. Part of his success is due to his common sense approach to the stock market. Investors have mocked Buffett for his old fashioned approach to investing when he sat out the dot com era bubble. But Buffett had the last laugh when others lost out during the bust.

Buffett also managed to largely avoid the major losses investors faced when they invested in securities dependent on subprime lending practices. In fact, he managed to profit from it.

Here are some principles Warren Buffett follows and investors would be wise to model:

Prosper.com is one of the most amazing things I have ever seen and a grand statement of the pioneering spirit that keeps the wheels of prosperity in motion. At Prosper.com individual private investors are able to assist in serving the needs of potential borrowers via a bidding process to finance a wide variety of loan requests.

It works like this: First you register for the service, which the site says is fast, easy and free. Then, you create a loan listing that states how much you want to borrow and the interest rate you are willing to pay. Potential lenders can begin bidding on your loan request as soon as your listing is created. As lenders compete to finance your loan, the interest rate can become more favorable to you. After your listing closes, if you have successful bids, apparently the funds are then deposited in your account. I believe Prosper.com acts as the intermediary for these deposits. Finally, fixed monthly payments are then automatically withdrawn from your account. Prosper.com claims that there are no hidden fees and that the loan can be paid off early without penalty.

I can't actually endorse this service because I have no personal experience with it but it sounds extremely interesting, and the site appears to be for real. I'd love to get some feedback from people who have successfully used this service. If it's as valid as it appears to be, we just might have a new era of personal financing coming over the horizon.

This weekend's Financial Times (subscription required) highlighted an article which focused on the movement to end quarterly guidance. Those behind it -- namely Pfizer Inc (NYSE: PFE) CEO Jeff Kindler and Xerox Corporation (NYSE: XRX) CEO Anne Mulcahy -- feel the move would allow companies to focus on long-term goals rather than short term fixes. This is clearly an admirable goal, but what are the costs of such a move?

The biggest argument for this move, other than the stated objective of better running companies with a long-term vision in mind, is an increase in executive job security, allowing them more time to see through their visions for the companies they are charged to run (although some, especially certain Yahoo! shareholders, would argue against this being a positive). Moreover, this would end companies massaging financial data in order to "make" certain shorter-term numbers to keep said executives jobs. Not to say this change would stop corporate fraud -- it won't -- but it will end one reason for these fraudulent practices.

The most important argument against this move is a move away from corporate transparency, which investors have been fighting for a long time to gain. For investors to get on board with this, they must be promised clarity into the companies in which they invest in some other way. Additionally, they must also be convinced the change is genuinely for the long-term good of the company, and not just to keep fat-cat execs in positions of power a little longer.

Other interesting effects, should quarterly guidance disappear, are the possibility of lowered stock valuations in the face of greater uncertainty in companies performances, and lowered stock volatility in light of there being less data for stocks to trade on. These can be said to be uniformly good nor bad -- long-term value investors would probably see these side-effects as positive, whereas day traders certainly would not.

With the Dow and S&P approaching new highs, conventional wisdom suggests investors would be becoming increasingly bullish. But, as measured by the AAII Index, bullish sentiment has declined to 28.6% from 46.9% three weeks ago. Bearish sentiment has increased to 54.6% from 29.6% during the same time period.

AAII has proven a very solid contrarian indicator over time. With bullish sentiment so low, this most likely means this rally has some serious legs. As the rally continues, those who are under-invested will have to rush and chase performance.

Remember, mutual fund inflow has stink, stank and stunk since the bursting of the bubble in the 1990s. There is still a lot of fire power in terms of individuals holding a ton of cash on the sidelines. I'd stay invested in stocks here and now.

Volatility Index S&P 500 Options-VIX up 1.19 to 11.16.

Equity Office Properties Trust's (NYSE: EOP) volatility is at 15 into Blackstone raising bid to $54 cash. Equity Office Properties is recently trading at $54.66, suggesting a higher bid is expected from other groups. Equity Office Prop announced it has amended its merger agreement entered on 11/19/06 with Blackstone Group. Blackstone will acquire all of Equity Office Prop common stock for $54 a share in cash. A group led by Vornado Realty Trust (NYSE:VNO) had bid $52. Equity Office Properties' overall option implied volatility of 15 is near its 2-month average, according to Track Data.

Akamai Technologies' (NASDAQ: AKAM) February option implied volatility flat is at 50. Akamai will report EPS on 2/7/07. Akamai, a leading global service provider for accelerating content and business processes online, recently traded at $53.47. Deutsche Bank has a $59 price target on Akamai . Alex Brown said, "We expect Akamai to deliver a strong 4Q with potential upside to our estimates on strong internet retail sales during the holiday season." Akamai's February option implied volatility of 50 is near its 26-week average, according to Track Data, suggesting non-directional price fluctuations.

Option volume leaders today were: Google Inc. (NASDAQ: GOOG), Apple, Inc.(NASDAQ: AAPL), US Steel (NYSE: X), Microsoft Corp. (NASDAQ: MSFT) and eBay, Inc. (NASDAQ: EBAY).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of Theflyonthewall.com.

A few sentiment indicators point to a market that might be in a tight range for the next few weeks.

After an excellent fourth quarter for stocks, investors fear has come back quickly. With a minor drop in the Dow, investors withdrew $838 million from stock funds during the first week of 2007, according to AMG Data. Investors were quick to turn to less risky investments such as money-market funds, which drew $891 million, and taxable bond funds that attracted $1.6 billion.

Conversely, the AAII index has seen investor bullishness jump to 49.1% up from 39% three weeks ago.

Such mixed signals suggests investors can be patient. I'd wait for the AAII index to come down below 40 before I'd put money to work.